China Changes How to Report GDP to Meet IMF's Standards

China is changing how the country will report their GDP in the future by measuring economic data quarterly. According to National Bureau Statistics (NBS), the new method will follow guideline provided by the International Monetary Fund (IMF). This comes after the government is trying to get IMF to give Yuan a reserve currency status in an effort to convince foreign investor and boost the country economic situation.

For the new calculation, China will be adopting the International Monetary Fund's Special Data Dissemination Standard (SDDS). Established in 1996, SDDS is the standard use by all developing country to measure economic statistic. This comes after previous devaluation of Yuan by the authority causing a slowdown in the country's economy.

According to Reuters, China's statistics bureau said that the new method will improve the data accuracy. By measuring data quarterly instead of using cumulative data, any fluctuation and minor movement in economic activity will be reflected in the GDP. Through this new method, the authority will need to provide the data for all three months of each GDP's quarter instead of releasing the final result only. In a report by Bloomberg, an economist for Commonwealth Bank of Australia said that the move will also increase data transparency. This means that GDP calculated will be in standard as other developed country.

Business Insider reported that many analysts were suspicious regarding previous 7 percent GDP reported by NBS. It was impossible according to analysts seeing that the economy has been slow during the first quarter of the year, causing foreign investors to be cautious.

Based on the new method, NBS had tested the calculation and had revised China's 2014 GDP and downgrade the result to 7.3 percent from 7.4 percent. This proves some analyst theory that the data released previously might have been tampered.

Besides adopting the new method, Chinese authority had taken many steps to improve the transparency of the country economic data including expanding the employment survey. China also made some changes in the country's policy such as allowing the overseas lender to trade the yuan and make a currency reference five times a day. The change was done to make sure the yuan will receive the reserve currency status like other developing country.

Besides IMF, NBS also had been working with the United Nations and other organisation to implement the new method. China is targeting annual economic growth to be unchanged at 7 percent for this year. China third quarter GDP is scheduled to be released on this coming October 19.